The majority of small and local charities report facing a “capacity crunch” due to an increase in demand for services, despite incomes generally stagnating or decreasing says the FSI in its latest small charity index.

Indeed, the FSI report shows that while increase in demand for services from small and local charities has increased by over 100 per cent since June 2013, statutory funding from local authorities has fallen by 11 per cent in the same time frame.

As a result of this, 19 per cent of small and local charity respondents to the index reported “fearing for the future” and were “potentially looking towards closure in the coming 12 months”.

Pauline Broomhead, chief executive of FSI, said the index showed that “organisations at the heart of our communities across the UK and beyond are at breaking point”.

“We can only address our most urgent challenge by addressing our most important one, building financially sustainable organisations at the same time as our trustees and staff are tacking the underlying challenge of building more robust governing boards.”

Other key findings

The index found that in the months between March and May 2017, over 77 per cent of small charity respondents reported that statutory income levels from local authorities remained “unchanged”, which suggested that “current commissioning processes continue to disadvantage small and local charities and community groups over larger charities”.

All regions of the UK, except for Scotland, reported overall decreases in statutory income in the quarter.

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In terms of voluntary income generated from the public, only 12 per cent of respondents reported an increase in the last quarter of more than 10 per cent. In the same time period, 20 per cent of small organisations reported a decrease in funds raised.

Despite over three quarters of respondents saying their organisations work in collaboration with other organisations, just 22 per cent of those were judged to be “collaborating at a meaningful level” with other organisations – which the FSI define as “undertaking more than 30 per cent of activities in collaboration with others”.

Fitting in with the index’s assertions that many small and local charities across the UK are reaching breaking point, issues around staff workload were rated the “greatest challenge” facing many small charities.